Squamous differentiation is a multi-stage process. Irreversible growth arrest occurs early during this process of differentiation and is induced when cultured cells reached confluence or after treatment with interferon gamma (IFNg) or phorbol esters. We have been using IFNg as a tool to obtain insight in the molecular mechanisms that link the control of irreversible growth arrest with differentiation. We have shown that IFNg blocks progression of the cells through the cell cycle at a specific point in the G1 phase. The expression of several cell cycle regulatory genes was found to be down-regulated by IFNg, including cyclin A, PCNA, cdc2, p53, p21 and c-Myc synthesis. In addition, IFNg inhibits the hyperphosphorylation of the retinoblastoma protein RB. The latter was shown to be related to he inhibition of cyclin/cdk kinase activities and the up-regulation of certain cdk-inhibitors. carcinoma cells are resistant to terminal differentiation and changes in growth-regulatory genes was not observed. Irreversible growth arrest is followed by a cascade of changes in squamous cell-specific genes. Our laboratory has identified and cloned several genes that are differentially regulated during squamous differentiation, these include transglutaminase type I (TGase I), cornifin a and b, relaxin and a membrane protein related to PMP22. To study the regulation of these genes, we cloned the 5'-flanking region. Footprinting, deletion mutation and mobility shift assays were used to identify DNA elements important in the transcriptional control of these genes. AP-1-like sites were found to be involved in the transcriptional regulation of these genes and are further characterized. Retinoids are important regulators of squamous differentiation. Retinoids inhibit the expression of keratin 13, TGase I and cornifin a and b, while they induce other genes, such as keratin 19 and TGase II. Nuclear retinoid receptor-selective agonists, an antagonist and a dominant-negative RARa receptor were used to study the retinoid signaling pathways involved in these actions of retinoids. Our results have demonstrated that these genes are controlled by different retinoid signaling pathways. The induction of TGase II was shown to be mediated by an RARa-dependent mechanism.